The present invention is not limited to, but typically finds application in, the mortgage lending industry in which lenders may wish to enter into alliance with real estate brokers or builders (“business partners”) in order that the business partner shall promote services offered by the lenders to the business partners' customers. This relationship typically results in a marketing services agreement (MSA) that outlines the responsibility of both the lender and the business partner.
For example, a lender enters into an MSA with a business partner for the purpose of having the business partner promote such lender's mortgage lending services to prospective home buyers. Pursuant to an MSA, the business partner performs marketing activities on behalf of the lender that include, inter alia, displaying signage, posters, and other marketing collateral, conducting print, email, or direct mail marketing campaigns, web-based advertising, and so on. The business partner represents and promotes the lender as the preferred lender to facilitate selection of the lender's services by the business partner's prospective customers in particular, and by consumers in general.
In exchange for marketing campaigns and activities performed by the business partner, the lender typically contracts and pays the business partner a marketing fee. The amount of the marketing fee paid by the lender to the business partner must be a fair market value (FMV) payment for bona fide services actually performed by such business partner. The lender can also make direct use of mass media marketing channels at its disposal in order to create demand for its services, for example print advertising, TV, or radio. To facilitate cross-comparisons, the dollar cost of the marketing services contracted either through business partners' marketing activities or through mass media channels can be expressed in terms of basis points (BPS) of the amount of the loans originated or closed as a result of these marketing services being performed for the lender. (A basis point is 1/100 of 1% so that, for example, 1.47%=147 basis points or 0.50%=50 basis points).
Accordingly, it is highly desirable for a lender to follow a routine approach for establishing competitive and reasonable marketing fees.